Audit 365182

Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that the non-Federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Condition: Methodist did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Methodist did not have effective internal controls and procedures in place to ensure Methodist maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or Potential Effect: Methodist did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned Costs: $12,807 Context: EY selected and tested 10 procurements over $10,000 with expenditures totaling $182,415 from a population of $1,289,446 procurements over $10,000 during the year ended December 31, 2024. Of the 10 expenditures selected for testing 1 procurement totaling $12,807 did not have evidence of sole source justification Identification as a Repeat Finding: This is not a repeat finding. Recommendation: Methodist should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of Responsible Officials: Methodist recognizes the current gap between Supply Chain Services and the Research Institute related to retaining documents for procurement activities. Supply Chain Services will develop processes to retain written documentation for procurement activities in accordance with regulatory standards. As Methodist is in transition to a new ERP system in Quarter 1, 2026, Supply Chain Services will include strategies to address the needs in both the short term and long term.

Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that the non-Federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Condition: Methodist did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Methodist did not have effective internal controls and procedures in place to ensure Methodist maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Effect or Potential Effect: Methodist did not comply with the general procurement standards and methods of procurement to be followed per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Questioned Costs: $12,807 Context: EY selected and tested 10 procurements over $10,000 with expenditures totaling $182,415 from a population of $1,289,446 procurements over $10,000 during the year ended December 31, 2024. Of the 10 expenditures selected for testing 1 procurement totaling $12,807 did not have evidence of sole source justification Identification as a Repeat Finding: This is not a repeat finding. Recommendation: Methodist should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of Responsible Officials: Methodist recognizes the current gap between Supply Chain Services and the Research Institute related to retaining documents for procurement activities. Supply Chain Services will develop processes to retain written documentation for procurement activities in accordance with regulatory standards. As Methodist is in transition to a new ERP system in Quarter 1, 2026, Supply Chain Services will include strategies to address the needs in both the short term and long term.